March 7 (Bloomberg) -- Some companies use in-home shopping
parties to get customers to spend on items like jewelry and
Tupperware in the company of friends -- and a lot of alcohol.
Diageo Plc is going straight to the fun by shipping liquor and
bartenders to clients’ living rooms.

For 2,000 pounds ($3,300), the world’s largest distiller
will deploy a bartender to make tiki-style cocktails such as Mai
Tais and Zombies for you and 19 friends in your own house.
Mixologists are also on offer for vintage cocktail nights, which
promise hipster favorites like Negronis and Vespers.

“At home, people are confident enough to make a gin and
tonic, but the cocktail scene is still new,” said Kenji Jesse,
who’s running the bartender training program for the service. So
far, he’s trained up 10 mixologists, all of whom were
participants in Diageo’s “World Class” competition to find the
world’s best barman, for the new service, which has so far held
two events.

While still in its infancy, the program is a signature
offering from Alexander & James, an online premium liquor shop
set up last year in the U.K. by Diageo. The world’s largest
distiller is counting on the site to get consumers to trade up
by reaching them directly. Like fashion websites that suggest
matching sandals for the dress you’ve bought, Alexander & James
pairs glassware to spirits for the perfect pour. Recipes for the
cocktail Missionary’s Downfall -- rum, peach schnapps, mint --
suggest using a 49-pound bottle of Ron Zacapa 23 rum and
drinking from a 12-pound tulip-shaped tumbler.

Next Frontier

The Internet is the next frontier for Diageo and its
closest rival Pernod Ricard SA, which are looking for ways to
grow their businesses in developed markets like Europe, where
discounting and fragile consumer confidence have hit sales. Long
restrained by the established interests of middlemen retailers
and bars, Alexander & James and Pernod’s SipStor “flash sale”
site, where products are sold for a limited time, are turning
the distillers into next-generation retailers.

By going straight to customers and showcasing higher-priced
liquors, Diageo can capture a slice of the booming online retail
market without alienating the outlets that sell its biggest
brands such as Johnnie Walker whisky and Smirnoff vodka. It’s
also a faster-growing segment -- European online sales will gain
72 percent to 323 billion euros ($444 billion) in 2018,
researcher Mintel predicts, a period in which total retail
revenue in the region overall will rise about 18 percent.

“What we’re trying to do is make ourselves differentiated
to give us a competitive advantage,” said Patrick Venning,
Pernod’s U.K. marketing director.

Ketel One

The bottles of alcohol on Alexander & James range from
25.75-pound Ketel One vodka to 1,980-pound The John Walker
whisky. SipStor gives customers a limited window to buy drink
packages like Absolut Elyx vodka with six branded martini
glasses for 120 pounds and Havana Club Mojito packs. Both
websites operate in the U.K., and Alexander & James in Germany,
and have potential for expansion, the companies say.

Diageo and Pernod are the first of the big liquor makers
trying direct sales online, though the former has tested the
water with Johnnie Walker Houses in Asia -- three stores that
sell pricey and bespoke bottles of their biggest Scotch brand.

While drinks companies are well-versed in marketing their
products, they’re new to selling them, according to Trevor
Stirling, an analyst at Sanford C. Bernstein.

“Online sales are going to be an interesting experiment
for them, but I don’t know whether it’s going to transform the
market,” Stirling said by phone.

‘Come Unstuck’

Brands that stick with one or two routes to market are
“going to come unstuck,” said Helen Blackholly, senior
director at consultant Alvarez & Marsal. That will herald a
necessity for companies to adapt the way they sell, she said,
adding that “the whole retail environment we see today could
start to change.”

While creating a website and putting in place systems to
package and deliver purchases may have been costly to set up, it
could be less expensive than the price of buying space to
promote brands in a supermarket, Blackholly said. The distillers
declined to comment on the start-up costs.

Interacting directly with customers on the Web also gives
companies access to previously unavailable information about
their shoppers, such as which websites directed them to the site
and what they look at on the site itself, providing a window on
how drinkers shop -- data usually amassed by retailers. That
allows them to target customers more effectively in their
marketing.

2,000 Pounds

“What’s going to be gamechanging is the direct access to
consumers,” said Antonia McCahon, Pernod’s head of digital
marketing. “When we do have more control over how we
communicate with them, it does have a knock-on effect.”

At 2,000 pounds, the parties might be lucrative for Diageo,
though they are clearly not for everyone. Should they take off,
Diageo’s Jesse says he may train as many as 40 more mixologists
for the service.

Whether that happens remains to be seen. After a London
promotional launch in January, where cocktails included Vesper
Martinis with Tanqueray gin, and Old Fashioneds, one guest said
she doesn’t see herself making the parties a habit.

The cocktails “were all skillfully mixed and a pleasure to
drink,” Lucie Kerley wrote. “But it’s definitely not one of
those, ‘I’ll-have-one of-these-dos-every night’ type of
things.”

But you could, because for 2,000 pounds, you do get to keep
the glasses. The bartender has to go home.